According to a survey by Hewitt Associates of 300
organizations, a little more than half (52%) of the
respondents never gave out holiday bonuses and 14% have
discontinued the practice.

The most common reason for eliminating the bonuses
was because they were too expensive (61%). Meanwhile 35%
said they did so because employees did not value it, 33%
cited entitlement issues and 21% said it was because they
switched to pay-for-performance programs.

Of those companies that never offered a holiday
bonus program, 45% said the reason was that all rewards
are tied to performance, 36% said it was because the
bonuses cost too much and 30% said they never considered
such a program.

The most popular form of holiday bonus is cash
(39%), closely followed by gift certificates (37%). Some
27% of employers will give employees a food gift, such as
a turkey or ham. These organizations continue to provide
holiday bonuses as a way to say thank you/show
appreciation (61%), maintain tradition (15%) and boost
morale (15%). More than half (58%) of companies surveyed
said that all employee groups are eligible for holiday
bonuses, while 20% said only full-time employees are
eligible.

Even if performance pay is gaining steam, with 80%
of employers now offering the incentive, Hewitt said in
its survey that those rewards might take a hit this year
in the face of competing costs such as health care,
energy and base salary increases.

The actual company spending on variable pay as a
percentage of payroll is 11.2% and is expected to remain
relatively stagnant in 2007 at 11%.

Just as holiday bonuses are on the decline, so are
the number of companies that say they will hold an office
holiday party. Sixty-five percent oforganizations plan to host a party, down from 74%
last year. Of those planning to throw a bash, 23% will
spend $5,000 or less on their parties, 27% will pay
between $5,000 and $20,000 and 11% will spend between
$20,000 and $30,000.